Monday Morning Oct 28 2013
Dot Coms Party Like It's 1999 reads the headline no Page B1
The tag line notes Twitter $11 B No Profit
Pinterest $3.8 B No Revenue
Snapchat $3 B No Revenue
Rocketfuel $2 B No Profit
We have been writing that positive mood, see COP versus oil price next has driven stock prices higher than most expected emabarassing those calling for a top earler this year. Now the dot.com mania has returned such that companies can go public with no earnings, recall my observation that Perot took EDS puublic at 190 to one P/E
COP versus Oil Price
This weekend we noted that the XES energy service ETF was still rising as oil prices have fallen. Here notice that Conoco Phillips is still rising as the oil price falls. The opposite was true last February, and COP and oil began rising together. But it is a negative divergence when the company stock rises while its produced product falls over 10%. THis is a classic example of mutual fund investor herding at the top of a market, all chasing the same stock.
Geese Exhibit Herding
Fund managers all use basically the same trend following software and end up buying many of the same stocks pushing them ever higher. Then when prices fall they all sell, recall the big drop in RAX Rackspace.
RAX
We are expecting tops and bottoms in markets over the next two weeks and will attempt to post more often to follow the story.
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